The most vibrant, audacious companies in the world are in East Asia; Eastern Exposure takes a new look at what they’re doing and why it makes a difference for decision-makers in the West. I’ve been doing this the last few years for Forbes, Forbes Asia and other publications, and as a consultant. Much of my career has been in the corporate world as a marketer for global telecom and media giants, but I’ve also started two companies, and ran an ad agency back when you could shoot dice at the Treasure Island with Bill Gates at 3 a.m.

Followup on the News: Internet Spat Breaks Out over Qnet and Multi-level Marketing in India

Reactions to Selling a Better Life, in the November 5, 2012 print edition of Forbes Asia.

Perhaps it was only a matter of time before the detractors of Southeast Asian multi-level marketer Qnet and its controversial founder and chairman, Vijay Eswaran, came out in force. Our story Selling a Better Life attracted a great deal of attention, almost all of it positive and much of it overtly heartfelt. But a few voices echoed the dark allusions of fraud and shady dealing that have dogged this company almost since its inception.

These voices were heard last month – but not in our own Comments section. Crusading financial journalist Sucheta Dalal, co-publisher of personal investment and business news site Moneylife and a prominent blogger, has campaigned against MLMs in general and Qnet in particular for a number of years. Her stories start out from the premise that Qnet is a scam, with headlines such as “QNet, the MLM has resurfaced in India; will people be duped again?” on November 11, and “QNet, the MLM company, has no answers to Moneylife’s simple questions” on November 20. It also appears in her Twitter feed, in comments such as “Its pathetic how Qnet is leading people to financial ruin” on December 12.

She even aired the suggestion that Qnet paid Forbes Asia to run our story: “Several Qnet dealers pointing to Forbes endorsing QNet!! Waiting for #Forbes to clarify! is it paid news or real?” on November 19. A genuine concern in India, where stories in mainstream newspapers are in fact sometimes for sale.

In fairness, fans and foes of Qnet tend to agree on one thing: the purpose of our story was to ‘endorse’ Qnet, a motive that never occurred to any of the people involved in its reporting, research, editing, fact-checking, and production.

In particular Dalal has locked horns with Qnet’s head of corporate affairs, Zaheer Merchant, in a volley of charges and replies over everything from the legality of Qnet’s business model to basic facts on whether meetings between them did or did not take place. Words in this dialogue waged in cyberspace include bribe, liar, threatened, untrue, scheme, Ponzi, pyramid and so on.

The back-and-forth between them became so contentious, with Dalal’s fervid denunciations and Merchant’s icy denials, that we extended an offer to both to use this column, Eastern Exposure, as a neutral site. We promised Dalal we would publish her questions verbatim and demand straight answers from Qnet; we promised Merchant we would publish his explanations verbatim. And we would let the readers decide.

Regrettably, Dalal refrained from taking part. She also opted to not identify self-professed ‘victims’ of Qnet who, she says, came out in one of her for-pay seminars in Mumbai a few weeks ago. Merchant did the opposite; his reply to Dalal’s charges is below.

But first, an observation on reporting in the age of the Internet. The charges against Qnet, we found, tend to originate in apocryphal, anonymous or debunked sources. They then find their way into Wikipedia or news blogs, which are then cited as fact. For example, it’s widely reported that Eswaran was arrested and jailed in Jakarta in 2007, but far less often that the charges were ruled as spurious and dropped.

Publication of our story would, we expected, attract solid, credible information on Qnet’s misdeeds in our Comments section. More than 20,000 readers and 157 comments later, this has not happened.

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Letter from Zaheer Merchant to Forbes Asia, responding to charges in Moneylife, its Comments section, and in Sucheta Dalal’s Twitterfeed.

“We reply to Ms. Dalal’s various carges and assertions:

Qnet has changed its name several times.

Companies change their names frequently for reasons such as branding, variations in lines of business, and marketing. In our case, this was done for strategic business purposes. When Qnet was founded in 1998 it offered only one product, commemorative gold coins. As the company added more products to its portfolio and the e-commerce platform evolved, the name GoldQuest was no longer suitable and it was changed to QuestNet and then shortened to QNet. Hundreds of companies all over the world have done the same sort of thing.

Disparaging information about Qnet must be accurate, because it’s in the Wikipedia entry.

We strongly dispute the credibility of the Wikipedia entry on Qnet. But we can’t do much about it: Wikipedia’s policy does not allow a company representative, a PR agency or anyone with a stake in the matter to edit entries. We have lodged a complaint with Wikipedia administrators about the heavily bias of the entry and a debate has been opened up on their ‘Neutral Point of view’ noticeboard, that you can see here:http://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_view/Noticeboard/Archive_29#Qnet_ltd

Please also note that Wikipedia is not considered an authentic source of information. Wikipedia is a public forum where anyone, even you can edit an entry. Unfortunately this has led to numerous quality problems for the portal which its founder Jimmy Wales admits himself. This has been acknowledged by leading media including the New York Times. You can read these two articles on the subject.

While the company was being investigated in Chennai, we experienced a significant amount of negative media exposure, especially in the newspapers in South India. Hence, in order to set the record straight and be able to provide a true picture of the company, we invited different publications to bust the myth that we were a fly-by-night operator with no credibility.

Journalists from several publications accepted this invitation and visited our Headquarters where they met with the global managing director of QNET and other senior officials of the company, visited our international customer support centre, our logistics facility from which thousands of products are shipped globally every single day, and also our training centre to watch an IR training in progress. They asked us questions in an open forum and we were able to respond to all their queries and concerns.

We fail to see how a simple invitation to review the entire operations and efficacy of the same can be termed as a “softening” process or any kind of a ‘bribe.’

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At ICon 2012, Infiniti founder, Mr. Dev Wadhwani took a session on Legality & Ethics where he explained to all how there is transparency when a customer is purchasing products online, through QNet and that unlike other online portals, QNet offers a fixed price, rather than one that keeps fluctuating frequently.

He made it clear that QNet isn’t selling opportunity, it’s focus is on selling products, but it also offers new customers, the chance to earn through referrals.

He said that today the MLM/Network Marketing industry is facing skepticism similar to what the Franchising industry faced when it grew to popularity in the 1950′s thanks to the widespread success of McDonald’s. He also mentioned how back then, the franchising model was seen as being very dodgy, because of which, it came within 10 votes of being deemed illegal in the US. Thankfully that law didn’t pass and today franchising has grown to a truly global scale, accounting for large amounts of revenue generated within the US and most countries.

I love this statement of his where he said that some people get their knickers in a twist, why do they over-complicate something they don’t understand?

According to EOW of Mumbai police, these team leaders of QNet received commission ranging from Rs40 lakh to Rs2.5 crore in the binary pyramid scheme which is banned in India

QNet, the Hong Kong-based controversial multi-level marketing (MLM) operator that is accused of collecting money under the garb of selling products suffered another jolt. The Economic offences wing (EOW) of Mumbai police, which is probing a case against the MLM company, arrested eight of its agents or independent representatives (IRs) as QNet refers them. The EOW also froze bank accounts of these people.

According to Times of India, the eight arrested are, Vivekkumar Singh, Shashibhushan Rameshwar Pandey, his wife Namrata Pandey, Sabeena Vijay Mathew, Vijay Mathew, Jagdevsingh Parmar, Rohit Chandra and Mahesh Baharwali, all of whom are team leaders of QNet.

Rajvardhan Sinha, additional commissioner of police (EOW) told the newspaper that “These accused have got commission ranging from Rs40 lakh to Rs2.5 crore in the binary pyramid scheme which is banned in India”.

Earlier, in August, the EOW froze six bank accounts of QNet and its associates with a balance of Rs46 crore in all these accounts. EOW had registered a case against QNet, for allegedly duping thousands of investors by selling them plastic and glass products terming them miraculous objects for treating severe diseases like Cancer. ()

The complainant, Gurupreet Singh Anand, a computer consultant from Lokhandawala, Andheri in his first information report (FIR) stated that his wife was duped for Rs30,000 by some people who had introduced themselves as the independent representatives (IRs) of QNet. Anand told the police, “They (IRs) had said that one of the bio-products my wife bought could be used to treat my 12-year-old son’s brain-related diseases.”

The FIR names five accused, including QNet’s Hong Kong-based founder Dato Vijay Eswaran, a Malaysian by birth and an Indian by ethnicity, who is photographed hobnobbing with the Prince of Saudi Arabia, in order to enhance his credibility in the Gulf.

As reported by Moneylife, QuestNet and GoldQuest, the MLM companies that had shut shop in 2009 following police action are back with a bigger bang. They now call themselves as QNet and are thriving in an environment where tens of thousands of Ponzis and MLM companies are able to lure people into believing that they have the formula to instant riches and a high growth career.

QNet operates in India through its official franchisee Vihaan Direct Selling Pvt Ltd, which carries the company’s brand name in the country. However, Suresh Thimiri, who is often touted as QNet India’s chief executive and had denied any relationship with QNet or any of its representatives, owns the ‘QNet’ trademark in India through his company Transview Enterprises Pvt Ltd!

Another interesting aspect in the whole episode is all top officials (?) of QNet India do not want to reveal their identity and remain hidden. Moneylife repeatedly sent emails to the company’s official PR agency and also some officials from its parent QI group but there is no information forthcoming.

You wouldn’t have used the word “Detractors”. Clearly shows your bias towards Qnet.

I would have appreciated if you had given balanced facts to both the parties and let readers decide whom to trust. (Unless you accept the fact that the whole intention of the article is to defend Qnet)

Thanks for the reply. I think of the word ‘detractor’ as quite objective. For example, just today I am a fervent detractor of Americans who think there should be fewer US regulations about guns that about the common household stepladder, and proud of it.

As to your understandable expectation of some more detail, I’ll dig into our research and send a few examples when I get back to the office. Stay tuned!

Until then, maybe articles like this should have a sort of concordance, or extensive footnoting. But these situations are so thorny and complex that such a thing could easily take up more than three times the space we had for this story.

But perhaps the best idea would be for the governments of the region to have much, much better laws governing MLMs, workable enforcement mechanisms, and transparency of information about them. In this, Ms. Dalal and I are in shoulder-to-shoulder agreement.

And anybody Indian regulator who feels the status quo is fine — well, we would be his detractors.

Donald: You say that “I am a fervent detractor of Americans who think there should be fewer US regulations about guns that about the common household stepladder, and proud of it”, could you please clearly own up if you are in favor or against Qnet with equal pride?

Awesome!!! WOAAH!! The founders and functionaries of QNet have nothing to hide and have responded squarely to ill-informed “allegations” on blogs and some sites. I wouldn’t say its a vindication, as anyways the “allegations” were opinions, ill-informed and more-so baseless!!! But it gives a slap on the face to the speculators of the Industry and the company.

Apart from that the article also brings the lady in the forefront’s undying quest to unearth scams where there are none. Perhaps, someone hasn’t heard the cliche: Everyday Is NOT a SUNDAY!!

Donald Frazier/ Forbes offered Ms Dalal to “lock-horns” on a neutral platform and she declines; it just goes to show how spineless Ms Dalal is, and her constant rant of “SCAMS”!! Perhaps, she and her kind just want to play around on their pitch, which unfortunately offers just 160 characters and personal blogs!!!